The Bo Dau BOT toll station on National Highway 3 in the northern province of Thai Nguyen (Photo: VNA) Hanoi (VNS/VNA) - The State Bank of Vietnam (SBV) has said it wouldcontinue to direct credit institutions to strictly control credit inpotentially-risky areas such as real estate and securities, especiallyBuild-Operate-Transfer (BOT) and Build-Transfer (BT) transport projects.
Thiswas part of the central bank's report sent to the eighth session of the14th National Assembly recently, which will be discussed by delegates.
In thereport, the SBV said many BOT and BT projects had been completed butwere generating less revenue than planned, causing non-performingloans (NPLs) of about 53 trillion VND (2.27 billion USD).
TheSBV has repeatedly warned commercial banks about lending to BOT and BTtransport projects due to the potential risks in this area. SBV datashowed that in the first nine months of this year, credit growth reached 9.4 percentcompared with the same period last year, but loans for BOT and BT projects onlyincreased by 1.85 percent.
EconomistVo Tri Thanh told Nguoi Lao dong (The Labourer) newspaper thatthe banking system’s credit resources for developing BOT and BT transportprojects was not only important in Vietnam but also in many other countries.
“Therisks of providing loans for these projects have been spoken aboutfor years due to the large amount of capital involved and the length of theloans. If investors are unable to balance capital it can easily leadto bad debts,” Thanh said.
He saidbanks often mobilised short-term capital for medium and long-term loans. If theloan was too large, it could lead to risks, including liquidity shortages.That's why the SBV had asked commercial banks to reduce medium andlong-term loans to reduce risks.
In orderto remove difficulties and facilitate the effective implementation of lendingactivities for BOT transport projects to serve economic development,the SBV has suggested Prime Minister Nguyen Xuan Phuc to continuedirecting ministries and branches to closely cooperate and actively support thebanking industry.
The banksaid that mechanisms and policies needed to be perfected to mobiliselong-term capital resources, which were in line with the long-term capitalneeds of BOT and BT projects. It was essential to focus on handlingproblems related to toll collections and implementing cashless collectionservices.
“TheSBV’s recommendations to the Government do not only aim to find solutions forcredit BOT and BT transport projects, but also reduce NPLs and clean up thebanking system,” Thanh said.
"Somebanks are already working to reduce the ratio of NPLs, so debt restructuringfor some BOT and BT projects needs to be completed quickly," he added.
At apress conference to review the banking sector’s operations in the thirdquarter held in Hanoi recently, SBV Deputy Governor Dao Minh Tu said thebanking system would still support BOT projects according totheir financial conditions and capabilities, ensuring safety andefficiency for credit institutions.
However,Tu said ministries and branches must also clarify policies related to BOTprojects to prevent risks such as low revenue from toll collections, whichdirectly affected investors who had taken out loans from commercialbanks.
“In thelong term, it is necessary to have a mechanism to develop capital resources fortransport and avoid reliance on bank capital,” Tu said./.
Thiswas part of the central bank's report sent to the eighth session of the14th National Assembly recently, which will be discussed by delegates.
In thereport, the SBV said many BOT and BT projects had been completed butwere generating less revenue than planned, causing non-performingloans (NPLs) of about 53 trillion VND (2.27 billion USD).
TheSBV has repeatedly warned commercial banks about lending to BOT and BTtransport projects due to the potential risks in this area. SBV datashowed that in the first nine months of this year, credit growth reached 9.4 percentcompared with the same period last year, but loans for BOT and BT projects onlyincreased by 1.85 percent.
EconomistVo Tri Thanh told Nguoi Lao dong (The Labourer) newspaper thatthe banking system’s credit resources for developing BOT and BT transportprojects was not only important in Vietnam but also in many other countries.
“Therisks of providing loans for these projects have been spoken aboutfor years due to the large amount of capital involved and the length of theloans. If investors are unable to balance capital it can easily leadto bad debts,” Thanh said.
He saidbanks often mobilised short-term capital for medium and long-term loans. If theloan was too large, it could lead to risks, including liquidity shortages.That's why the SBV had asked commercial banks to reduce medium andlong-term loans to reduce risks.
In orderto remove difficulties and facilitate the effective implementation of lendingactivities for BOT transport projects to serve economic development,the SBV has suggested Prime Minister Nguyen Xuan Phuc to continuedirecting ministries and branches to closely cooperate and actively support thebanking industry.
The banksaid that mechanisms and policies needed to be perfected to mobiliselong-term capital resources, which were in line with the long-term capitalneeds of BOT and BT projects. It was essential to focus on handlingproblems related to toll collections and implementing cashless collectionservices.
“TheSBV’s recommendations to the Government do not only aim to find solutions forcredit BOT and BT transport projects, but also reduce NPLs and clean up thebanking system,” Thanh said.
"Somebanks are already working to reduce the ratio of NPLs, so debt restructuringfor some BOT and BT projects needs to be completed quickly," he added.
At apress conference to review the banking sector’s operations in the thirdquarter held in Hanoi recently, SBV Deputy Governor Dao Minh Tu said thebanking system would still support BOT projects according totheir financial conditions and capabilities, ensuring safety andefficiency for credit institutions.
However,Tu said ministries and branches must also clarify policies related to BOTprojects to prevent risks such as low revenue from toll collections, whichdirectly affected investors who had taken out loans from commercialbanks.
“In thelong term, it is necessary to have a mechanism to develop capital resources fortransport and avoid reliance on bank capital,” Tu said./.
VNA
